Why Spy?

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Besides improving his natural search rankings, Long also wanted to move up in paid search results, and used a tool called SpyFu for that purpose. At Spyfu.com, typing in any e-commerce site produces a free report on the retailer's daily paid search spend, average ad position, paid versus organic clicks per day, the 10 most productive keywords that the retailer bids on and more.

Long employs SpyFu's paid service that provides even more detail on paid and organic search for individual sites, such as a report on all the paid search ads competitors placed for a particular keyword. That lets subscribers see when advertisers have invested more and when they have changed the wording of their headlines and ads—for instance, to capture seasonal sales. That service costs $79 per month or $499 per year.

Seeing which keywords competitors were pouring money into helped Long decide which terms he should be testing. "If a competitor is spending huge money on a term we need to at least invest to try it out," he says.

L-com's investment in im- proved natural and paid search results has paid off. "When I first got here, of 150 terms we were on the first page for three and now it's 30," Long says. "And traffic has jumped 100%."

While those results seem good, Long uses the web traffic tracking service from Compete to show how much better L-com is doing versus rivals. "Our traffic is up 100%, but is everyone else up? We use Compete to show that not only is our traffic up, it's up significantly compared to the competition's traffic," he says.

Long pays about $300 per month for the Compete Pro service that also includes data on which keywords competitors are bidding on, what percentage of their traffic comes from paid search versus affiliates and other sources, and where site visitors go after they leave a site. It also provides a two-year history on these metrics that helps Long track his performance against rivals over time.

Compete also provides custom services for retailers that can compare a retailer's conversion rates with rivals', where consumers abandon checkout and where they go, and can track categories, such as data for the appliance sections of major retailers. Fees for those custom services range from $2,500 to $25,000 a year, Compete says.

Best price

Online pricing is another area that lends itself to quantitative measurement, with software that can scrape e-commerce sites, noting the price of various products. That information can then be compiled to compare retailers' prices for a particular object and show when prices change.

Roberts Distributors, which operates the e-commerce site RobertsCamera.com, has been using a pricing service from Channel IQ, obtaining a twice-weekly report on the prices of nearly 700 products at the web site of just one large competitor, B&H Photo. "We figure they have enough knowledge to know what the rest of the world is selling things for," says Bruce Pallman, general partner of Roberts Distributors.

Channel IQ's reports show him how far off his prices are from those at B&H, and Pallman pays close attention when the difference is more than 5%. If his price is far below that of B&H, Pallman checks to make sure he has not fallen below the minimum advertised price set by the manufacturer, such as by forgetting to remove a $50 rebate the supplier had offered the previous week. Violating a manufacturer's pricing policy can be costly—Pallman says Sony Corp. will pull a line from a retailer for 60 days for a single violation.

Another reason Pallman doesn't want to be far below his competitors is that many of the cameras, computers and other electronics products he sells are in short supply this spring following the earthquake and tsunami that devastated Japan in March. "I want to be sure I'm not selling too cheap. We can't get enough product right now," Pallman said last month. "If we're going to cover our overhead we need to make higher margins on less product."

Before signing up with Channel IQ last year, Roberts Distributors would manually check the prices of about 100 SKUs on B&H Photo's web site once a week, a process that took an employee about two and a half hours. Now Pallman spends about 30 minutes each week looking at the twice-weekly reports on 700 SKUs. The Channel IQ fee of about $1,200 a month is well worth it, he says. "We've been able to move with the market twice a week without missing a beat."

But Pallman does not plan to track other competitors besides B&H. Channel IQ charges more for each site it searches, and Pallman does not believe he would get enough insights from other sites to justify the added cost.

He's not alone in seeing the limits to tracking the pricing of online rivals. The Golf Warehouse decided against paying for a pricing service from Price Manager after giving it a try and gathering some interesting data. The e-retailer sent Price Manager a product feed and the service matched up The Golf Warehouse's SKUs with those offered by competitors, and showed how much they varied. "It's useful because if our competitors are lower, we want to know to make sure we're competitive," says Brad Wolansky, CEO of online and catalog retailer The Golf Warehouse, part of Redcats USA. "On the flip side, if we're priced materially lower than competitors we want to know that because we're leaving money on the table."

But for the type of products he sells, Wolansky decided the service didn't provide enough useful information to justify the cost. That's because many of the items on his site come from closeout buys that competitors would not have, and most of the rest is covered by minimum advertised price, or MAP, rules of manufacturers, preventing discounting. "We have the same price on today's Nike driver that everyone else does," Wolansky says. "The price is MAP-controlled, so it's no mystery. We don't need a service to tell us that." PriceManager did not respond to a request for pricing information.